Ars Technica: ‘Fed’s new instant payment system could be trouble for PayPal, Venmo’
The USA is about to finally catch up to the rest of the world which has been enjoying instant peer-to-peer transactions directly from the bank. Here’s Ashley Belanger, writing for Ars Technica:
Yesterday, the US Federal Reserve officially launched FedNow, a new system rolled out to 35 early-adopting banks and credit unions for processing instant payments between financial institutions. The Fed’s goal is to eventually connect more than 9,000 banks and credit unions nationwide, tossing out the old payments system and supporting faster payment processing between all US institutions.
FedNow isn’t all about peer-to-peer transactions, it’ll be great for instant rent payments and access to paid invoice funds too. But I’m expecting that, when this reaches mainstream, it will mean the current crop of peer payment services — Venmo, Cash App, Apple Cash, and the like — will need to compete harder by adding new convenience features or rewards to remain useful and relevant going forward.
Since I already use those services as very simple, very temporary intermediaries to my bank account, I’m glad to see something first-party arrive. But I have some trouble imagining that my banking app is going to come up with as good a user experience as I get with $Cashtags or Apple Cash over iMessage. We’ll see.